2009年6月27日 星期六

Price-cutting in Japan points to repeat of deflation misery

A Tokyo district plagued with burglaries has turned to planting flowers to beautify its streets and help stamp out crime.

東京一飽受竊案所苦的地區，透過種花美化街道來協助消除犯罪。

"’Operation Flower’ began about three years ago. By planting flowers facing the street, more people will be keeping an eye out while taking care of the flowers or watering them," said Kiyotaka Ohyagi, a Suginami City official. "The best way to prevent crime is to have more people on the lookout."

Suginami, with a population of 528,800, saw a record 1,710 break-ins in 2002.

杉並區人口約有52萬8800人，2002年卻創下1710起闖空門案的犯罪新高紀錄。

When a neighbourhood watch group found that there were fewer burglaries in buildings on flower-lined streets, Suginami decided to kick off Operation Flower and asked volunteers to plant seeds on side streets and in front of their homes.

當一個鄰里守望互助組織發現，在種滿鮮花街道兩邊的大樓竊案發生率較低時，杉並區決定發起「種花行動」，並呼籲志工在小巷裡和自家門前也種下花苗。

The flowers are part of a wider crime prevention campaign. The district also has 9,600 volunteer patrollers and 200 security cameras set up in areas where there are frequent break-ins. It also emails crime information daily to residents.

Japan, which showed the world how awful a sustained bout of deflation can be, may be heading back into that vortex.

The country’s main index of consumer prices dropped 1.1% in May from a year earlier, the biggest decline since 2002, the government said Friday.

Oil is part of the explanation here: Because crude prices have fallen so far from their peaks a year ago, they’re exerting unusual downward pressure on inflation rates. In the U.S. the consumer price index, including food and energy costs, was down 1.3% in May from a year earlier, the biggest drop since 1950.

But excluding food and energy the U.S. CPI was up 1.8% in May from a year earlier. In Japan, by contrast, the CPI ex-food and energy was down 0.5% in the same period, signaling more widespread price cutting.

Japan is much more sensitive to the risk of true deflation, which is a broad-based decline in prices that can feed on itself and have a severe debilitating effect on an economy.

Consumers, whose spending accounts for more than half of the economy, may delay purchases if they expect goods to get cheaper. That would erode profits and force companies to cut wages, which have already slid for 11 months.

Finance Minister Kaoru Yosano said an "extreme" slump in demand and production are causing the drop. "We continue to monitor developments in prices and need to carefully manage the economy to avoid a deflationary spiral," he said.

As Japan struggled in the aftermath of its real estate and banking system crashes of the early 1990s, the economy stagnated in the late 1990s and early 2000s.

That brought on deflation: Japan’s consumer price index fell every year from 1998 to 2002, was unchanged in 2003, then declined again in 2004. The index began to move modestly higher in 2005.

The policy responses of the Obama administration and Federal Reserve to last year’s economic and credit catastrophes have in large part been aimed at keeping the U.S. from falling into a similar deflationary cycle.

The Fed wants to believe it’s winning the battle, as I noted in this post on Wednesday. But many economists say the risk of sustained Japan-style deflation in the U.S. remains high.